Friday, June 15, 2012

Rumors of fed investigation into cable industry data-caps

The Wall Street Journal reports that the US Justice Department has initiated an investigation into possible anti-competitive practices by US cable companies through their introduction of data-caps.

According to WSJ, the investigation was partially initiated by Comcast actions to treat their own streaming content differently than competing companies like Netflix. Comcast decided to exclude their own service from the data-caps they impose on their customers.

If there is an investigation and this leads to any sort of action by the Justice Department or any other federal agency, this could be the first major test to the concept of net-neurtrality in the US. If upheld, net-neurtrality will most likely further weaken the position of the cable companies by moving them towards "dumb-data-pipes" strategic territory.

Cable companies are facing daunting challenges from innovation, and just like telecom carriers they are trying to limit the competitive impact by challenging regulations and setting limits on customer behavior. While innovation by cable companies and telecom carriers would be an obvious strategy to counter OTT services, the poor track record of innovation by these companies has made them focus on legal challenges and limits to customer behavior.

Because this strategy has no hope of long-term success, the cable and telecom industry is in a steady downward spiral towards ubiquity with no strategy on how to change the game.